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Distinguishing “Unfair” Commercial and Nominative Fair Use

Nominative use of a trademark is permissible when it is fair. It is fair when the domain name identifies the respondent’s business rather than competing with the trademark owner. It is commercial by definition. Confusion is not a disqualification otherwise there could be no nominative use, but it can be minimized through disclaimer. Besides, Panels have distinguished proper and improper confusion. Where the domain name is properly used confusion is not a determinative factor. The difficulty is in accurately parsing the facts. Confusion is improper where the choice violates one or more of the provisions of Paragraph 4(b). An illustration of this is Waterlefe Community Development District and Waterlefe Master Property Owners Association, Inc. v. Roy Hunter, FA1207001455368 (Nat. Arb. Forum August 27, 2012) (). The Respondent claimed was making nominative use of the WATERLEFE mark for real estate services. Complainant offered similar services. The Panel concluded that the registration and use of the domain name infringed Complainant’s trademark right. He concluded that the

Domain names are not only descriptive of the information the public expects to find on the website associated with the domain name, but are also indicative of sources of this information or services offered. Thus, a likelihood of confusion exists.

The difference between proper nominative use and abusive registration lies in the manner in which the domain name is being used. The addition of “real estate” to the trademark creates a likelihood of confusion under paragraph 4(b)(iv) and fails under 4(b)(i) as making a bona fide offer of services because Respondent competes with Complainant, whereas the addition of “installer” to LUTRON signifies a noncompeting business. Lutron Electronics Co., Inc. v. Welch Services Group Limited, FA1103001377398 (Nat. Arb. Forum May 2, 2011) (. In Lutron, the Panel held that “Respondent has a legitimate interest in the domain name because it has been using the disputed domain name since 2007 to maintain a website offering a legitimate business fitting and installing Complainant’s genuine products obtained through the commercial channels of Complainant.”

The Waterlefe Respondent is not prohibited from offering real estate services in the Waterlefe development; the prohibition is against using Complainant’s trademark to capture Internet users looking for Complainant. This is supported by the factual matrix. Respondent redirects (emphasis on redirects) the domain name to resolve to a website called “Sarasota Bay Real Estate.” Redirection is a factor in determining bad faith because it “diverts actual and potential clients of the Complainant and is likely to cause confusion among consumers.” The Panel notes that

Even if the Respondent uses the disputed domain name to sell property located in the Waterlefe development, this use does not grant the Respondent rights or legitimate interests to use a domain name that fully incorporates the Complainant’s trademark…. In this regard, the Panelist believes that although the Respondent can use the “Waterlefe” trademark with reference to property offered for sale on his or his business partner’s website, it is not legitimate to use a domain name that fully incorporates the Complainant’s registered trademarks to re-direct Internet users to such a website.

Nominative fair use of a trademark is a way of balancing competing rights. The policy is clearly expressed in a number of cases from federal circuit courts. “It is” (held the Court in Toyota Motor Sales USA Inc. v. Tabari, 610 F.3d 1171(9th Cir. 2010)) “the wholesale prohibition of nominative use in domain names that would be unfair,” concluding with the following strong policy statement: “It would be unfair to merchants seeking to communicate the nature of the service or product offered at their sites. And it would be unfair to consumers, who would be deprived of an increasingly important means of receiving such information.”

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